Novartis AG (NVS) Stock Rises on Plan to Increase Profit Margin

NEW YORK (TheStreet) -- Novartis AG (NVS) shares are up 0.39% to $101.49 in afternoon trading on Thursday after the biopharmaceutical company said that it expects to increase its profit margin this year amid cost cutting initiatives and a restructuring of its drug portfolio.

The company said that it is focusing on execution and innovation as it looks to strengthen its bottom line.

Part of the company's transformation is the divestiture of its influenza vaccine portfolio to CSL (CSLLY) which is expected to close in the second half this year.

"While we continue to improve productivity and generate leverage, our capital allocation priorities remain the same: investing in the existing business, growing the annual dividend, bolt-on acquisitions, and share buybacks," Novartis said in a statement today.

TheStreet Ratings team rates NOVARTIS AG as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NOVARTIS AG (NVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 342.2% when compared to the same quarter one year prior, rising from $2,941.00 million to $13,005.00 million.
  • Net operating cash flow has increased to $1,704.00 million or 27.06% when compared to the same quarter last year. In addition, NOVARTIS AG has also vastly surpassed the industry average cash flow growth rate of -23.98%.
  • NOVARTIS AG' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NOVARTIS AG increased its bottom line by earning $4.32 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($5.16 versus $4.32).
  • The gross profit margin for NOVARTIS AG is rather high; currently it is at 66.98%. Regardless of NVS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVS's net profit margin of 108.72% significantly outperformed against the industry.
  • You can view the full analysis from the report here: NVS Ratings Report

If you liked this article you might like

Novartis May Sell U.S. Generic Pill Business Amid Industry Struggles

Novartis May Sell U.S. Generic Pill Business Amid Industry Struggles

Teva Shares Fall as FDA OKs Another Generic Version of Multiple Sclerosis Drug

Teva Shares Fall as FDA OKs Another Generic Version of Multiple Sclerosis Drug

Axovant Shares Crater as CEO and President Both Resign

Axovant Shares Crater as CEO and President Both Resign

Generic Drug Makers Hurt By Latest Federal Government Budget

Generic Drug Makers Hurt By Latest Federal Government Budget